Why Does Your Credit Matter?

When people talk about your credit, they’re generally referring to your credit history and credit scores. (You may have heard of FICO scores; they’re simply the most popular type.)

Your credit affects your chances of getting approved for jobs or apartments, and also affects your interest rate when you apply for other loans.

When you have poor credit, you might have a tough time qualifying for a nice apartment or mortgage — but with excellent credit, the world’s your oyster.

Do you have great credit, but have never used a credit card? Instead of starting with a mediocre card, you could probably get approved for a valuable cash back card or travel card, or one of the other best credit cards on the market.

How Credit Cards Help You Build Credit

Without credit reports and scores, lenders will be wary of giving you money. After all, they have no idea whether you’ll be a reliable borrower.

By making on-time payments each month, you’ll show lenders you’re worthy of their trust — and will eventually qualify for higher credit lines, cash back rewards, and travel rewards.

Then when it comes to other types of loans, like mortgages or auto loans, you’ll also qualify for better interest rates. That could save you a lot in the long run: On a $300,000 mortgage, for example, just one additional percentage point of interest could cost you more than $60,000 over the course of 30 years.

How to Get a Credit Card Without a Credit History

If you’re reading this article, you probably haven’t established any credit yet.

With that in mind, here are seven ways to find your first credit card.

Check for Pre-Qualified Offers

Much to your surprise, you may already qualify for some credit cards. Take a moment to see if you’re pre-approved for any cards, which would allow an easy entrance into the credit card game.

Just because you’re pre-qualified for a card, however, doesn’t mean it’ll be a good fit for your lifestyle — so make sure to read reviews before applying.

Become an Authorized User

After becoming an authorized user, mutual trust is important: If the primary account holder makes a late payment, it could damage your credit. And if you, as an authorized user, incur any debt, the card issuer will ultimately hold the primary account holder responsible for paying it back.

As long as you trust your primary cardholder and they trust you, becoming an authorized user can be a smart way to get your first card and start building credit history — without requiring a hard inquiry on your credit reports.

Consider a Student Credit Card

Student credit cards are designed for people with limited or no credit history, making them relatively easy to get.

While most student card offers don’t come with much in the way of cash back rewards or benefits, the Discover it® Student Cash Back (Review) offers 5% cash back in categories that rotate every three months. That’s one of the better reward programs you’ll find as a student with limited credit.

So why are we even mentioning them? Because one perk of store cards is they usually have lower approval requirements than mainstream cash back and travel cards.

While you should consider other options first, a store card may make sense if you shop with a specific brand frequently enough to make its rewards worthwhile.

Figure out where the store card fits in with your overall credit-building strategy: It probably won’t be a good card to use for all purchases, for example, but it could help you qualify for better cards in the future.

1. Credit Card Interest Is Very High

That’s why we advise paying off your credit card bill in full each month. If you do that, you’ll completely avoid paying interest — while still enjoying the convenience and credit-building that plastic provides.

2. Minimum Payments Are Dangerous

When you receive your first credit card bill, you’ll see an amount labeled “minimum payment.”

While it can be tempting to pay this — and nothing else — it’s a terrible idea. As noted above, the interest on credit cards is very high. When you make just the minimum payment, you’ll start accruing interest on any remaining balance, and your total debt can quickly spiral out of control.

3. It’s Not a Debit Card

Instead of withdrawing money from your checking account with each transaction, you’re taking out a loan from your credit card issuer. That’s why it’s important to carefully monitor your purchases — and only spend what you can afford.

4. Intro APRs Don’t Last Forever

If you see a card that advertises an “intro APR” of 0%, it means you won’t pay interest on purchases for a period of time (often 12–18 months).

While, technically, that’s an interest-free loan, be careful. If you don’t pay off your balance by the end of the promotional period, you’ll be on the hook for the remaining debt at extremely high interest rates.

5. Mistakes Can Haunt You

If you get a credit card, be diligent about making your payments on time, every time. Late payments can stay on your credit reports for seven years, and may trigger penalty APRs that are even higher than normal.

3 Qualities Shared By the Best First Credit Cards

In addition to being open to applicants with limited credit profiles, they also offer:

1. No Annual Fee

When it comes to your credit scores, the average length of your credit history matters. So you should probably plan to keep your first credit card open for a long time.

When you choose a starter card with no annual fee, you’ll be able to keep it open forever — at no cost. Even if you move on to other cards later, you can keep that first credit card open to maintain a lengthy credit history.

2. Rewards

Though it might be surprising, even people with limited credit can qualify for rewards credit cards.

While you’ll also see interest rates advertised, we don’t think they’re vital when choosing your first credit card. Because if you follow our advice, and pay off your credit card in full each month, you’ll never pay a dime in interest.

Wrapping Up

When used responsibly, credit cards are a great way to establish a credit history and build up your scores.

You just need to find the credit card that works for your scores and income. If you’re new to the world of credit, that may mean choosing a student or secured card; if you’ve already established some credit, then you may already qualify for a decent rewards card.

Whatever card you end up choosing, make sure you fully understand the terms — especially the interest rates and fees.

Pay your card on time, every time, and eventually you’ll be able to qualify for some of the best credit cards available.

The responses below are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. It is not the bank advertisers' responsibility to ensure all posts and/or questions are answered.

Keit Urban

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Just a heads up. You should check your credit on credit check total or myfico. Their numbers are more accurate. I was in the same position and raised my credit from 505 to 652. I was so happy that the hired credit experts who helped me in removing some items from my report was so effective. They recommended credit check total and it revealed that my true credit score was actually 785. I was shocked. I thought my credit was in the mid 600’s. Turns out that credit karma isn’t the best credit monitoring service to use. Not trying to bring you down, just trying to tell you to double check your score. Credit Karma might be off. Let’s hope it’s not. You can contact the credit experts if you really need to improve your credit and get real credit restoration fixcreditkarma at gmail dot com

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